Buried at the bottom of today’s sports page is another story indicating the state and local taxpayer-subsidized F1 race in Austin is getting further off track. Comptroller Susan Combs should take the opportunity to untangle taxpayers from this lemon of a deal. It does, meanwhile, present a cautionary tale of what happens when well-healed investors get the state into the racing and gaming businesses on fallacious policy grounds.
According to the Austin American Statesman, European billionaire Bernie Ecclestone (who owns the F1 brand) is putting distance between himself and the project — even questioning the future of the race before it starts. It was revealed, halfway through the article, that the local promoters haven’t even secured rights to hold an F1 race at the track. (Mr. Ecclestone, for what it’s worth, is right now facing fraud charges in Munich; such is the company Texas taxpayers are being forced to keep.)
You’ll remember that a group of wealthy, politically-connected Texans saw F1 as a fun investment toy – provided the state made them sweetheart deals and socialized some of the risk (while keeping any profits private, of course).
They promised, with self-financed economic studies, the state would reap massive returns if we just subsidized them. Never mind that F1 has a history of going belly-up in the US…
Democratic State Sen. Kirk Watson of Austin a couple years ago got taxpayers on the hook for giving subsidy cash to the track. He and a bipartisan coalition of allies rely on the fantasy economics big-spenders always trot out to support corporate welfare. And, of course, there is always an eager set of local and state officials ready to spend your money to help out their donors and country club friends. (That’s crony capitalism.)
The race has stood on shaky ground from the start, but promoters said it would be the only F1 race in the US. Well, until Ecclestone showed up in New Jersey a couple weeks back and announced a track was being built there… without any taxpayer subsidies.
Comptroller Combs, who has long supported the F1 subsidy, recently provided us with a statement saying she had been “under the impression that Texas was going to be the exclusive race in the United States.” She acknowledged the circumstances, and possible benefits, have now changed.
“As you know, I am required by law to administer the Major Events Trust Fund. I cannot discriminate against those that apply nor have the discretion to deny applications. However, let me be very clear. I will not allow taxpayer dollars to be at risk. We will insist that the appropriate guarantees are made to the state to ensure taxpayers are protected.”
(Frankly, if the state’s comptroller cannot get taxpayers out from such an obvious boondoggle, then the Legislature better do some serious law-fixin’ come next session.)
In truth, the taxpayers never really benefit from corporate welfare, and especially not from the luxury-business subsidies given to politically connected investors seeking government aid for their hobbies.
It’s not the free-market they want, mind you, with its pesky competition and demands. They seek direct hand-outs, or exclusive deals from government granted only to those connected through high-dollar political influence.
For example, over the next year we’ll no doubt see coalitions of wealthy, influential Texans start adding their voices to the misguided and fallacious idea that expanded gaming will make Texas’ coffers bulge… Well, start checking out property holdings and investment disclosures; you’ll probably find striking similarities. (It’ll just be a coincidence that they want exclusive gaming permits to go where they just happen to have property at the ready…)
It will be many things they are after, but it won’t be the free-market and all that pesky competition. And what taxpayers will get is what this F1 deal is turning into: another expensive lemon.
